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US loses 5G war against China

TOKYO – It's been a little over a year since the US started its war on China's high technology, with the aim of blocking the country's telecommunications companies from 5G infrastructure projects around the world.

The struggle originally raised concerns that the world's digital networks would be divided into two mutually exclusive blocks led by the United States and China. Former Google chairman Eric Schmidt was among those who sounded the alarm.

However, the reality is likely to surprise those who believe that a separate but roughly equal division of the 5G landscape is in the making. This is because China is likely to become the dominant player ̵

1; a result that would make many Asian economies nervous.

5G networks, which transmit huge amounts of date, can be compared to artillery. And having them controlled by China can greatly increase the country's political and military influence.

The Trump administration is considering a ban on US-made parts and software for Huawei, a move that would hinder the Chinese company's sales.

© Reuters

Still, many may believe that the United States still has the upper hand, swayed by Washington's continuing hardline policy toward China.

Last August, the United States rolled out the National Defense Authorization Act, which proposed banning government agencies from using products from Chinese telecom giants Huawei Technologies and ZTE. August 13 this year, with the NDAA's one year waiver expired, the ban officially went into effect. Now President Donald Trump wants to ban any company that uses equipment from the two Chinese companies to do business with the government.

Washington fears that Huawei and ZTE could provide Beijing with access to sensitive information through their 5G equipment. Despite China's denial of the allegation, US allies are pushing to block companies from their own 5G networks as well.

The Trump administration is also considering a ban on the sale of US-made parts and software to Huawei – a move that would damage Huawei smartphone sales, especially as the company relies heavily on Google's Android operating system and apps.

But when it comes to the global 5G rollout, the United States is in a weaker position. Japan and Australia are practically the only countries agreed to block Huawei and ZTE. Among other US allies, the UK and France have been under no obligation to study their alternatives, while Germany believes it would be problematic to ban the Chinese companies.

Huawei is already deeply embedded in 4G infrastructure in the UK and Germany. "Although we are required to block them from 5G, it will be difficult to do so," some German experts say.

Given these circumstances, the battle for 5G domination is likely to be settled in Asia – the growth engine of the world economy. This was highlighted at the Japan-ASEAN Media Forum held by the Japan Foundation in Bangkok August 26-27. Asian journalists at the event spent a lot of time discussing the 5G drag match between the US and China, and most Southeast Asian participants concluded that the US would lose.

And there is evidence that this is actually the case. Cambodia will begin offering 5G services this year using Huawei equipment, while in May, Malaysia and Thailand said both Huawei and ZTE are welcome. Major telecommunications in Indonesia, Myanmar and the Philippines have also joined the companies for their 5G rollouts.

Thailand has said it would not prevent Huawei or ZTE from joining the country's 5G network.

© Reuters

The United States, Japan and Australia should understand why this is happening. First, there are too few alternatives to Huawei and ZTE, as they have a combined share of almost 40% of the world's mobile infrastructure market. Ericsson and Nokia – two European technology titans – have shares of 29% and 23.4% respectively, but their equipment is considerably more expensive than their Chinese competition.

According to Southeast Asian experts, Ericsson and Nokia equipment are 20% to 30% more expensive than for Chinese suppliers, and mainly prices the two European players out of regional markets, as well as India.

Another reason is Asia's growing distrust of America, which they consider to be involved in espionage such as China, even as Washington continues to plan for the potential for Chinese spying.

Southeast Asian government officials and security experts are well aware of the dangers of Chinese spying, but know that the United States also uses highly advanced technology to vacuum information and monitor foreign media closely.

In evidence, they cite US intelligence practices exposed by former National Security Agency contractor Edward Snowden, who revealed that the United States had secretly tapped communications from foreign governments and companies.

In short, there is no difference between the US and China in terms of spying. In fact, some people mainly Muslim countries like Malaysia, Indonesia, Pakistan and Brunei are more afraid of US spying than China's.

After two decades of war in Afghanistan and the Middle East, Asian Muslims have no illusions about US power. A former diplomat summed up his sentiments accurately: America drops bombs on land that doesn't fall in line, as it did with Iraq when ruled by Saddam Hussein. But China releases money [investment] over many countries, including those it hates. As such, China is the least of the two evils.

So what can America and its allies do? To fight Huawei and ZTE, telecoms in Europe, Japan and South Korea need to become more price competitive. In addition, the United States must share specific information about the risk of relying on the two Chinese companies.

Furthermore, it is important to recognize that the US-Chiba battle for global dominance in advanced wireless technology will not end with 5G. Sixth generation technology is already under development, especially by Japan's huge telecom group, NTT – a clear signal that the battle for 6G has already begun.

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